Spreadbetting Guide > IG Index Spread Betting

IG Index Spread Betting


When I started spread betting the principal reason I went for IG Index some years ago was that they have been in business for several decades.   It’d be a terrible shame to do well on the market and then have your spread bet firm go pop on you like MF Global.  This continues to be true today and now IG Index is one of the UK’s top 200 companies. A member of the FTSE 250, they are one of the market leaders, with about 140,000 clients executing five million transactions every single month.

Background

IG Index was founded in 1974. It was set up to let ordinary investors bet on the price of gold. (Fun fact: ‘IG’ originally stood for ‘Investors Gold’.) Eight years later, IG became the first company to offer spread bets on the FT30, which – at the time – was the major index before the FTSE 100. In 1995 IG Index was the first to offer bets on individual shares.

IG Index allows traders and investors to bet on rising or falling financial instruments such as the FTSE and Dow Jones indices as well as the movements of currencies and gold values. The company was originally established by Conservative Party donor Stuart Wheeler in 1974, but in the first years it only took bets on the gold prices.  It now quotes more than 30 indices as well as some  7,000 individual equities, most major commodities and foreign exchange.

IG Index’s trading platform makes it very easy to invest/place bets and IG is an impressive operation.  Going long and short is very easy; and you can even have long and short positions in the same instrument concurrently -you just have check a box marked “force open.”

Different accounts are offering including Limited Risk and Plus Accounts -:

Limited Risk is as it says, limited risk – the risks IG are prepared for you to take are limited – this is good for a new spread better.

Plus Account This is a full account where you really can lose your house and contents.

Note that IG Index operate on a tiered margin basis so the percentage of margin required will increase with the size of your holding. It used to be flat a 20% margin (deposit) on any holding. Now with the size of my holding, which I didn’t see as particularly significant, the margin required can go up to 50%.

Mobile Trading: Yes! IG Index has a full suite of mobile trading platforms based on its PureDeal trading platform including applications for the iPhone (including the iPad), Android handsets, BlackBerry and Windows 7 phones. IG have also recently released an interface for Windows phones. You can use these to place trade and/or close positions, move stops or browse real-time prices, news and charts. Traders can check charts to examine price movements in a variety of time frames, and add indicators as needed such as Bollinger Bands, moving averages or Relative Strength Index. A handy feature is that even if you aren’t logged onto your phone application, you can turn the phone on its side to check the latest prices for popular markets like the FTSE 100 or gold.

Open a spread betting account with IG Index and you will benefit from:

  • Competitive spreads on all markets
  • Low deposit rates
  • Risk management tools, including Guaranteed Stops
  • An exclusive range of free seminars
  • Superior technology – including their award winning trading platform, tailored mobile apps and market leading charts

IG Index also allows you to bet on credit. The amount of credit you will be allowed is at the discretion of your broker and will depend on your income. Just remember that its great when it works but can be devastating if it goes wrong.

Charting Tools: IG’s rading platform also provides the tools you’d expect for technical and fundamental analysis. These enable you to add and edit your own chart indicators, and look at company data at a granular level. For example, BHP Billiton’s fundamental data is shown below:

IG's Technical Analysis

Perhaps on of the most interesting functionality about IG is its clients sentiment indicators:

Social media has become increasingly prevalent in spread betting in recent years.  IG’s client sentiment indicators allow you to see current opinion on various markets at a glance. For shares, a majority view tends to prevail for an extended period of time. For indices the change is often more marked, with sentiment shifting in line with major events. Here’s an example of a client sentiment indicator, for FTSE 100 constituent Diageo:

IG's Client Sentiment Indicator

The client sentiment indicators provide a snapshot of how clients are dealing, but  IG also provide more detailed data on current sentiment over a variety of time periods. The ‘trading activity’ indicators give four timeframes, varying from hourly deals to positions held for a month or more. Below is the trading activity data for mining firm BHP Billiton:

IG's Trading Activity
Finally, IG’s  insight centre has a dedicated section for news and analysis, which covers all major markets. This gives you an overview of important events. It also has a specific shares section, which also provides commentary on corporate news.

Liquidity: In order to purchase an asset, you need somebody else to sell you that asset. Liquidity risk is the potential that nobody in the market will be willing to take on the other side of your position at the time and price you want to deal. Because IG has a large base of over 140,000 clients and handles 3-4 million transactions a month, we deal in high trading volumes and can almost always facilitate the other side of your position. What’s more, because IG claims to maintain neutral positions in the market, their profits do not rise if you lose, nor do they fall if you win.

Stability: Particularly when the markets are volatile, financial institutions come under a lot of pressure. You’ll have seen on the news that some institutions have recently defaulted, resulting in their clients losing large sums of money. When choosing any financial provider, it’s important to select one that takes measures to protect your money. By spread betting with IG you’re choosing the market leader; an organisation that’s been financially strong for decades. As the world’s first financial spread betting company, it remains the world’s leading operation of its type.

IG Index Review – A Trader’s Perspective

IG Index was the first spreadbetting firm that I chose to use several years ago. The decision was primarily based on its reputation within a relatively young industry and the low financial barriers to beginners opening an account. Although I was not in a position to take up the option of trading with no deposit; the option is available for those who can prove that they have the financial backup to cover their positions.

I began by opening an account with £50 and signed up to the excellent ‘TradeSense’ programme which provided a education package for beginners and also the ability to trade with smaller stakes than usual. Effectively, this allows new traders to ‘demo’  IG Index in a real-money environment with minimal risk and reduces the chances of blowing-up an account in the first few trades. As the lowest stake available this was incredibly attractive.

What sets IG’s Tradesense programme from some of the training programmes offering by other spread betting providers is that during the first 6 weeks of opening your trading account, you can deal in much smaller sizees than normal and at a reduced cost, which allows you to try out trading without putting too much money on the line.

I quickly became familiar with the platform and trading interface which have consistently been at the forefront of the industry. Over the past five years IGindex has won numerous industry awards and their interface has become established as the industry standard. IGindex tries to combine the power of a multi-market, cutting edge interface with simplicity and navigational ease for all levels of trader. The PureDeal platform offers an extensive range of currencies, shares, commodities, options and both specialist and exotic trading possibilities.

Having originally been drawn to IGindex as an equity investor and CFD trader who wanted a straightforward entry into forex, without the financial requirements of traditional currency speculation, I found myself becoming absorbed in a diverse range of markets.  Over the past two years IG Index have been pioneers in the area of binary bets (digital options) and I have used these extensively with IG’s easy-to-execute interface and educational material. Although many other brokers offer this service and provide a more extensive range of markets, IGindex cover a solid range with the option to trade binaries on 5 minute timeframe on several indices. Their forex spot price binary options allow you bet on the 8pm closing spot price of a currency pair and they also offer a weekly binary on selective forex pairs.

IGindex have maintained some of the tightest spreads in the industry and show why in a recent poll by Investment Trends that over 60% of spreadbetters in the UK currently hold an IGindex account. With such a phenomenal market share IG has been able to stay on top with competitive spreads such as an 0.8 pip spread for EUR/USD , AUD/USD and USD/JPY as well as 1pip on the FTSE100 and 0.5 points on spot gold prices. These really are some of the lowest available and, with an execution rate of 0.1 seconds for 99.6% of trades they really do offer an impressive service.

However, one of the major drawbacks of IGindex that I experienced was the difficulty in transferring from a ‘Limited Risk’ account to a ‘Plus account’. As a new account holder at the time, I signed up with a small deposit and looked to take advantage of trading from 0.10p per pip and hence I had to take the ‘limited risk’ option.  The premium for trading with guaranteed stops was significantly wider spreads which became something of a double-edged sword for anyone looking to take short-term trades. Clearly the guaranteed stop option is a good source of risk management for many new traders but the inability to amend this function for those trades where it may be unnecessary caused me some frustration. Talking to the highly responsive helpdesk which is open from 8am-9pm I found that I would need to deposit a significantly larger amount in order to become eligible for this upgrade.

For experienced traders who wish to deposit over £50’000 into an IG account there is a ‘premium account’ option which offers all the preferential treatment one would expect from this service. This will give you a dedicated account manager and also access to a 0.5% interest payment on your funds which are held within a secure separate account. It also gives you fully-customisable mobile dealing and tailored trade functions as well as access to exclusive events and seminars.

The trading interface itself has several unique features which makes it stand out from the crowd of other spreadbetting firms. One of the sources of frustration for many spreadbetters are the restrictions placed on opening both a short and long position in the same market. IG allow this through their ‘force open’ function which I found very helpful for trading strategies which require hedging within the same market. This is particularly attractive for breakout trading and the option reflects how IG innovates within the industry to satisfy the demands of its customers.

Dealing on the PureDeal platform is straightforward with the possibility to have multiple tickets running at any one time.  Although I admit this sometimes caused me navigational issues I think for many traders it is helpful especially for intraday trading across several markets. Fully-customisable watch lists are provided and the ease of navigation to trade live and set stop/limit orders allows fast and efficient trading. IGindex prices tend to reflect the underlying market closely and they show the fluctuations in spread clearly on the platform interface.  Mobile dealing is available across iphone, Blackberry and android handsets and these all incorporate the industry-leading IT Finance charts that IG use on their web interface.

Overall, my experience with IGindex has been very positive. They are clearly the market leaders for a reason and this is reflected in the innovative functions and market-leading spreads on many of their markets. As with all financial institutions they are highly supportive of high-net clients and offer preferential treatment to this group, however, their introductory ‘Tradesense’ programme and educational packages show that they are dedicated to introducing beginners to the world of financial spreadbetting.  Tight spreads, innovative tools and a diverse range of markets are the reason why the majority of traders have opened an IG account.

Conclusion

I have accounts with 9 different companies and have traded since 2005 and each have their own issues but IG Index has probably the best accessible platform with a very stable trading platform even in volatile market conditions – but of course you pay for it as it can be more expensive on some shares.  Quite simply, you can’t do much wrong by choosing the world’s largest and longest-established financial spread betting firm – they are serious, trustworthy and client-focused always striving to do things better and lead the way in category development.

I did some research some months also covering spreads/slippage etc of various spread betting firms and my conclusion at the time was to stick with IG who turned out to be the best based on customer satisfaction figures and business practices. They may not be the most suitable for all types of trader though. Unfortunately, I find the spreads and rolling charges for IG mount up to too much for a regular trader like myself, but the performance during big movements on IG is great and every trader needs that.

Verdict

IG Index is one of the most innovative spread betting firms around. IG Index spends a lot on software development, giving traders cutting edge tools to identify trends and execute trades. As a consequence, its dealing platform gets updated regularly.

If you’re new to spread betting, IG Index is for you. The firm recently launched TradeSense: a six-week training package for beginners, where you can dip your toe in the water betting at just 50% of the minimum bet size for the first 2 weeks.

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